Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.
Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:
- Low Tier: < $267,042
- Mid Tier: $267,042 – $392,156
- Hi Tier: > $392,156
First up is the straight graph of the index from January 2000 through April 2009.
All three tiers bumped up in April, just like last year. The low and high tiers both bumped up 0.28%, while the middle tier increased just 0.03% The low tier has rewound to March 2005, the middle and the high tiers to May 2005 (all the same as March’s data).
Here’s a chart of the year-over-year change in the index from January 2003 through April 2009.
The low tier actually saw a slight moderation in YOY declines in April, similar to the blip we saw in the high tier in February. Here’s where the tiers sit YOY as of April – Low: -18.4%, Med: -16.3%, Hi: -16.4%.
Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.
Whereas April 2008 resulted in a bit of a bump in the chart, April 2009 looks like more of a plateau.
(Home Price Indices, Standard & Poor’s, 06.30.2009)
Greg Perry » Jul 1, 2009 at 9:28 am
The C/S tiers are very narrow and working in the Eastside / Seattle I can’t get my head around the concept that the 3rd tier starts at $392,156. For me, this seems like a lot of information that has no real relevance or practical value.
What does this tell us?
jon » Jul 1, 2009 at 9:50 am
“Whereas April 2008 resulted in a bit of a bump in the chart, April 2009 looks like more of a plateau.”
But whereas May 2008 was down, May 2009 will be up about .3%. So this time next month the 2009 bump will look bigger than the 2008 one did, and I expect it will continue for longer as well. The lower inventory numbers alone tell us that.
The median prices for SFH in King County are:
Feb 348
Mar 335
Apr 350
May 351.5
Kary’s earlier estimate of -0.223% had the sign wrong because there was a big shift to the lower end of the market in the NWMLS numbers during that time. I haven’t looked closely, but I don’t expect next month will show as strong a shift, so the CSI should be closer to the NWMLS.
I don’t know what June’s NWMLS numbers will be, but the CSI following that will also do well when the Mar number is shifted out of the 3 month average. So I think we are looking at 3 more strong months of CSI numbers.
patient » Jul 1, 2009 at 11:11 am
” So I think we are looking at 3 more strong months of CSI numbers”.
Not sure if I would call 0.2% strong but if last years seasonality in a crashing market is a guideline you might be correct. I.e a couple of months flat to “not so strong” increase in Q2 before we turn downhill with a vengeance again through Q3,Q4 and Q1 2010.
patient » Jul 1, 2009 at 11:25 am
Another way to view the “strong” April csi is that it is only 0.2% off the lowest value recorded since July 2005. That gives you some added perspective.
softwarengineer » Jul 1, 2009 at 11:32 am
SEASONAL GLOOM AND DOOM SEPTEMBERS
How come by September, everything goes to Hades in a hen basket again [see Tim's 2008 data]?
Hugh Dominic » Jul 1, 2009 at 4:35 pm
By softwarengineer @ 5:
Because that is when people who really want to sell or have to sell start making deals – they dont want to be stuck with the house for another 6 months until the next Spring selling season…
Jonness » Jul 1, 2009 at 7:56 pm
By patient @ 3:
I think that’s a polite way of saying there are a lot of fiscally irresponsible people buying houses right now.
sid » Jul 1, 2009 at 8:12 pm
By Jonness @ 6:
You cant be that sure anymore. If the recovery happens (which is what the market is predicting) then this summer might just be the bottom as far as affordability is concerned.
rojo » Jul 1, 2009 at 9:35 pm
RE: Jonness @ 6 –
Your highness Jonness,
I have a question for you since you make pretty aggressive statements – what academic or professional background do you have to say what you just said?
Have you ever owned a home?
Are you financially capable of owning a home if the market bottoms with another 10-15% down?
wreckingbull » Jul 2, 2009 at 5:09 am
RE: rojo @ 9 – That is good. Past ownership of a home gives one some sort of financial vision into the future. I think the soaring foreclosure rate pretty much nullifies that argument.
what goes up must come down » Jul 2, 2009 at 7:45 am
rojo what is your background?
Kary L. Krismer » Jul 2, 2009 at 7:46 am
RE: wreckingbull @ 10 – I’d agree with you on that, obviously. But I think the point was more what’s the motivation of people posting here.
How many are like DavidB over in P-I land, where he purposefully sold thinking there was a bubble coming?
How many are just current homeowners interested in future prices?
How many are renters who will only buy if they think there’s no chance that prices will fall further?
How many are people who have no ability at all to buy, and are just jealous of those in society who have been more successful than them?
This site focuses way too much on price. In another thread I’ve been debating Scotsman, and one topic that came up was the purchase of my new house and sale of the old. For that transaction future appreciation was maybe the 5th reason at best that I bought the new house, and future price declines was maybe the 3rd reason that I sold the old house. Future prices are not the be all and end all of financial decisions, and for that I’d point to the automobile market, where virtually every purchase is a stupid purchase if you just look at price.
softwarengineer » Jul 2, 2009 at 7:54 am
RE: sid @ 8 –
YOU CAN’T BE SURE OF THAT ANYMORE?
Hi Sid:
Can you be sure that the 9.5% unemployment today [and going up with no end] is comparable to the 16-25% unemployment levels during the Great Depression?
Here’s a report that even suggest the 6% unemployment last Fall was comparable to the 25% Great Depression rate; in part:
“….To compute the unemployment rate, the BLS divides the number of individuals by the total labor force, which consists of those over the age of 16 — employed and unemployed. The arithmetic applies only to the “civilian non-institutional population” which means it excludes individuals in the armed forces and in prison.
That wasn’t the case in 1933 when the unemployment rate was reported as 24.9%. The definition of the labor force in 1933, according to Lebergott, included individuals in the military and prisoners. It also counted individuals as young as 14.
More significantly, the definition of “unemployed” was not, according to Lebergott, limited to those actively seeking a job.
Several economists suggest that because of those differences, comparing the 24.9% “unemployment rate” of 1933 with the 6.1% rate today might not be appropriate….”
The rest of the MSM URL:
http://www.foxbusiness.com/story/markets/economy/jobless-rate-deceptive-depression-comparison/
Even Dr. Roubini, Dr. Doom, won’t admit America’s 9.5% unemployment rate compared to the Great Depression is a total joke.
Even the federal government’s Bureau of Labor Statistics documents my point, as June 2009 is Great Depression level in writing, at 16.5%, see the proof:
http://www.bls.gov/news.release/empsit.t12.htm
But you’ll continue to argue with the facts I’ve presented and expect our Great Depression economy to bounce back this year….LOL
The media’s latest nonsense is stating that our current horrifying unemployment rate [Great Depression level IMO] is a lagging indicator of the bounce back….LOL….is that like saying someone’s horrifying foreclosure papers on their home are just a lagging indicator you’re going to make money in RE soon?
Don’t get me wrong, I do hope you’re right, but relying on “doncha know” gut feel and trusting most of the discreditted media, that’s batting 000 on economic forcasting for years now, sounds more of a mathematical risk, than expecting to win the million dollar lottery.
Assuming you own RE, I do hope your home’s loan isn’t upside down and/or you bought too much RE investments clearly losing mass value this decade [and into the next decade, IMO].
Good Luck with your Pink Pony possible predictions Sid, you’ll need it :-)
alex » Jul 2, 2009 at 7:58 am
RE: Jonness @ 7 –
The inescapable truth: plenty of people have been buying during the last couple months, and they’re not pushing the bargain too hard.
The strange thing about it: they’re driven by non-events such as change in weather and a small rise in interest rates.
The really sad part: these buyers – regardless of what pejorative name you choose to give them (monthly payment buyers, fiscally irresponsible) – are the majority of the population, and the ones who make or break the market.
Kary L. Krismer » Jul 2, 2009 at 8:00 am
RE: softwarengineer @ 13 – Well if this is as bad as the Great Depression, then our parents clearly exaggerated. Now I’m beginning to wonder about walking 2 miles to school in 6′ of snow–uphill both directions.
Kary L. Krismer » Jul 2, 2009 at 8:03 am
By alex @ 14:
What makes you say that? Some buyers have been negotiating pretty hard, and there are some areas (e.g. over $1,000,000) where the prices are greatly reduced.
But there are also others that really don’t care. They’ll offer full price just to get the place.
softwarengineer » Jul 2, 2009 at 8:07 am
RE: Kary L. Krismer @ 15 –
WE DON’T HAVE A DUST BOWL THIS TIME
Hi Kary:
At least we have Safeways and such with food and excess outdated overstock going to food banks today, it sure beats having bums knock on your door for a sandwich….LOL
Rojo » Jul 2, 2009 at 8:26 am
RE: Kary L. Krismer @ 12 –
Exactly Kary!
Doesn’t matter what my background is since I am not claiming to know much about real estate. I am just a normal guy who has bought and sold more than 1 home.
The bullsh*t comments being posted on this blog do smell of jealously, anger, financial inability of being able to get into the a house of their own.
Also guess what, people getting into the market now will define the market going forward.
Jonnes, wreckingbull and others are waiting for everything to crash and burn so that they are left standing to come sweep up those million dollar houses that will sell for less that $200K soon. But I guess people buying houses right now are spoiling their plans of home sweet home ownership because it might stop prices from falling much further!
So, it doesn’t matter what my background is because I am not the one making these harsh comments and neither am I predicting anything.
Want to make this site useful, help people who are either trying to sell with good profession advice from Ira/Kary/Greg and others. Or help new home buyers get some advice – not from doomssayers but from level headed people who have some substance behind what they are
patient » Jul 2, 2009 at 9:02 am
RE: Rojo @ 18 – Rojo, what you recommend for this site is what you get when you hire a real estate agent, what you don’t get is a financial risk analysis and that is what this site does so well due to The Tim’s post and the many commenters here with good economic sense and insight. There are also real estate professionals that contributes to challanges and often good discussions to balance things a bit ( even if MSM is already flooded of the rosy part of the equation ). If you think the risk factor is not of any value or needed I can inform you that we are in the worst recession since the great depression which has left many states broke and on the brink to bancrupcy and the government in huge debt. Many larger corporations have imploded, etc, etc just becuase people neglected risk and paid to much for their homes.
Kary L. Krismer » Jul 2, 2009 at 9:09 am
RE: Rojo @ 18 – I wouldn’t go so far as to say everyone with a negative opinion of the future is a doomsayer. There are plenty of reasons to be pessimistic.
what goes up must come down » Jul 2, 2009 at 10:52 am
rojo = recession what recession
it is just negative media there isn’t really a recession at all
Here comes the sun………….
sid » Jul 2, 2009 at 7:02 pm
RE: softwarengineer @ 13 –
My comment was in response to Jonness where he made a statement that people purchasing a house right now are fiscally irresponsible. I was bearish on housing for many years and would have agreed with him the last few years. However, I do think people who waited and are purchasing now and are able to get houses at early/mid 2005 prices will do ok. The market (not the media) is expecting a recovery later this year. I think we have bottomed and we go up from here at a very very slow pace. Will be interesting to see what the Case shiller numbers for May, June will be. I will be surprised if we don’t see small month over month gains showing market stability.
Kary L. Krismer » Jul 2, 2009 at 7:08 pm
RE: sid @ 22 – If C-S was up for April, I’d be shocked if it wasn’t up for May and June too. But that doesn’t mean much due to the season.
sid » Jul 2, 2009 at 7:33 pm
By Kary L. Krismer @ 23:
Did you predict it to be up during may, june last year also?
DeanG72 » Jul 2, 2009 at 9:37 pm
I’m trying to get my head around on a turnaround. My fiance and I make over 6 figures together and could buy a house but I just don’t see how you can flood the market with supply then cut the number of eligible borrowers by restricting financing and then expect prices to recover. It defies my economic sensibilities. Before 10 people wanted to sell a house, 15 wanted to buy and 15 could get a loan….now 10 people want to sell, 15 want to buy, 5 people can get a loan….I just can’t see it…the hopes for a recovery all seem tied to abstract numbers with no fundamental reasons. I just don’t see how you can severely cut demand and expect a recovery….maybe a return to normal? I still don’t get it though…I have to think most buying now either don’t care about appreciation or are drinking the koolaid. I guess I’d like to see more underlying reasons why people like Rojo think things are getting better without anything to back that other than a percentage point or two. The stock market has had bear rallies lately and seems to be in an unstable position at 8500. How do people know if this is a bear rally in the housing and that it’s not going to plunge again this fall. I’d like to believe the cheerleaders but I don’t see any evidence to contradict most of the predictions for further reductions that I see on here.
Kary L. Krismer » Jul 2, 2009 at 10:58 pm
By sid @ 24:
I doubt I made any such prediction, but good point anyway. The three month moving average was up for May and June 2008 from April, using the NWMLS data, but only just slightly, while C-S was down for those two months. So they don’t always move in lockstep, just like how this year for April C-S was slightly up even though the 3 month average for the NWMLS was slightly down. They don’t move exactly in lockstep, but they are highly correlated.
Given that May was down for the NWMLS, it being up for C-S is more questionable.
Kary L. Krismer » Jul 2, 2009 at 11:01 pm
RE: DeanG72 @ 25 – I think what you might be missing is supply is dependent on price. At the lower prices there are fewer people willing to sell their house. Add in those who have actually given up, and the supply is downeven further. But if prices increase anywhere near the peak, the supply will probably rise dramatically.
So at current prices the supply isn’t that great, but as prices rise the supply will increase more than normal, which will restrict any future price increases (assuming such price increases occur).
johnnybigspenda » Jul 5, 2009 at 10:43 am
Has anyone taken a look at the two new ETFs called MacroShares Major Metro Housing Up (UMM) and MacroShares Major Metro Housing Down (DMM). Could be a interesting way to hedge or even profit from whatever direction you believe ‘housing’ is headed:
From an atricle I read:
Incredibly, Robert Shiller, the Arthur M. Okun Professor of Economics at Yale University, and best-selling author of Irrational Exuberance, is involved. In fact, he is MacroShares’ co-founder and chief economist. Both ETFs are benchmarked to the well-known S&P/Case-Shiller Composite-10 Home Price Index of home prices in the country’s 10 largest cities.